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International banks unlikely to debt finance Argentina’s new PPPs

Risk not commensurate with project debt returns; investment crucial to fill gap as economy normalizes.

International banks’ appetite for debt financing Argentina’s upcoming programme of infrastructure projects via a new public-private partnership (PPP) structure is likely to be extremely limited.

The first Argentine PPP projects will be awarded by the end of April, with an estimated value of a little over $5 billion. These projects are part of three tranches of deals that are expected to be awarded in 2018, made up of 13 highways and two bridges.

However, one head of project and trade finance at a large European financial institution that has big Latin American operations told Euromoney at the IDB conference in Argentina that he wasn’t prepared to finance any of the projects.

“There is too much risk for long-term projects in Argentina,” he said. “None of my colleagues at other banks will finance the debt portion either – except for maybe the Chinese banks.”

He said that purely domestic projects, such as the toll roads, come with too much regulatory and pricing risk over the lifetime of the project.

“Who knows who Argentina will elect during that period? A future presidential candidate might propose scrapping the tolls, win an election, and, given the instability in the country’s history, that’s not too remote a possibility.

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